It's taxes, stupid

Why the NDP should stop rich-bashing and love tax cuts

Commentary from Larry Solway

  The other day, during a training session I was doing for a Canadian organization, the person I was interviewing proclaimed: "Tax cuts are good for the economy. It's a proven fact!"
  It was only a role-playing training session with a spokesperson who has to talk to the media. I set aside any opinions I have and suspend judgment. I am a teacher. I teach how to put the right "spin" on what they want to say. Hey - it's a living.
  I'm paid, though, to assume the role of provocateur, or devil's advocate, so I challenge. "What makes you say that it's a proven fact?"
  The reply: "It is! Everyone knows that."
 

What happens if we do away with all consumer taxes?

  I give up. Now graven in stone is the new conventional wisdom. The new dogma that tax cuts are good comes from people who want tax cuts, especially people who pay what they believe to be too much tax. Remember the "trickle-down" theory? Trickle-down was a Ronald Reagan axiom. When Reagan ran against Bush for the presidential nomination it was Bush who described the Reagan tax cut trickle-down policies as "voodoo economics."
  So where has the economic epiphany come from? When did we start to say that it was an "established fact" that "everyone knows?"
  It was the weapon used with stunning success by tax-cutting politicians who have made us all believe that tax cuts are somehow the restorative the economy needs. Only days ago George Walker Bush told Americans that he would bring on the tax cuts to revive the economy.
  If more money in corporate coffers is good for all of us, why do companies lay off employees even when their profits are at all time highs? If you put more money in the hands of the "average" consumer (who actually seem to be in the really high income brackets), do they spend more or do they squirrel more away in RRSPs, pay down their mortgages, and make new speculative investments that make the stock market rise artificially?
  For the last couple of weeks I have been writing about the renewed role of government in the lives of all of us; of how government can and must be the people's benefactor when the marketplace turns on them; how government must do what corporations can't do (and shouldn't be asked to do) like ensuring work in down times or like making sure there is a good supply of rental housing.
  Now we come to what I think should be at the heart of New Left politics: fair taxation. I have parted emotional company with many of my colleagues who have seen political advantage in bashing the wealthy or the apparently wealthy. At the heart of NDP leader Howard Hampton's campaign in the 1999 Ontario election was the assertion that the top 5% of taxpayers were getting the lion's share of the tax cut benefits - $1.5 billion to be precise. It looked like it should play well. It didn't. It was seen as the usual poor bashing the rich, the usual revival of class warfare
  The villains were perceived as everyone who earned more money than most of us. The irony is that most people don't want to profit by sticking it to the rich - they want to join their ranks. So auto workers, whom Buzz Hargrove couldn't and never will deliver to the NDP, voted to support their overtime-bloated earnings by voting Tory. Can't blame them. We vote our self-interest while proclaiming sanctimoniously that we should be "caring" for the less fortunate.
  Let's scrap all that. Not only does it not work politically, but it is disingenuous to a fault. Maybe in very hard times when people are truly angry, you can gain some political ground by attacking the people who are responsible for hardship. But that's another idea. It is from another time. And it may be that that time is gone.
  We must steal a page from the book of the doctrinaire tax cutters. If they so genuinely believe that income and corporation tax cuts are a boon to the economy because they stimulate the movement of consumer dollars, then those people cannot object to applying that same principle to the only real way to put more usable money into the hands of all consumers.
  So far, this sounds like orthodox neo-con tax cutting. Except we have to propose tax cuts that are truly fair because they benefit everyone equally. The most unfair and burdensome taxes are also the ones that most unfairly impact the revenues of business and reduce the buying power of all consumers. I am speaking of sales tax, of GST or of what is in use throughout Europe: Value Added Tax. I have always maintained, they are eminently democratic, because they fall equally on rich and poor. The guy buying a Mercedes Sports Ute pays the same 8% (in Ontario) and 7% federally, as the guy buying a ten year old Plymouth.
  What happens if we do away with all consumer taxes? What happens if the Goods and Services Tax disappears? What happens if provinces look elsewhere than the pockets of the needy for some of their revenues? What happens if all those foregone taxes have to come from somewhere else: from far more democratic graduated income and corporate taxes. The affluent may be upset. But if they believe that fewer taxes create more business which increases revenues, how can they deny that elimination of sales taxes will likewise increase spending with the effect of producing more revenues? They won't because they like a tax system that favours them.
  If there is any benefit to be had from tax cuts - and if there is any political benefit to the people who endorse the policy - then the NDP must embrace it. Only by introducing fairness and resisting "rich bashing" can the Left's ideas have resonance with everyone. That's where the future must be for Canada's left.

Should we cut taxes? Is class warfare alive? What do you think?

And don't forget to take the Straight Goods poll.

Posted, January 29, 2001

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